Prep Center Questions Answered
Are you considering working with an FBA prep center? In this article we cover common questions about FBA prep and pack centers, how to leverage them, and identify good deals.
I see lead times like 24 or 48 hours being advertised. Are those real? What affects that? Is there anything I can do to improve it?
Lead times around 24-48 hours are standard across the industry, but many factors can affect them. Every business expects customers to follow a process, and deviations create delays. Think of your favorite restaurant: ordering from the standard menu is a lot faster than custom orders, right?
You can improve lead times by making sure the “menu” at your prep center matches your workflow. It’s important to work out all the details and action items before you start doing business. We recommend a flowchart, clearly showing roles, responsibilities, and time frames for each side.
Ask these questions before you get started to make sure the prep center is on the same page about your needs:
- How and when do they expect to be notified about shipments to their warehouse?
- What information do they need to identify your deliveries? What happens if they can’t identify what your supplier sent?
- Do they require payment before they ship out to FBA? If so, what forms are accepted and how long does it take to process a payment?
- If you use inventory management software like Inventory Labs, be sure to ask if they support it.
- Who schedules the shipping plan into FBA, and how is that accomplished?
I just started selling on Amazon. Can a prep center help me, even if I have low volume?
Prep centers are best used to scale your supply chain. As a new seller, you probably don’t have scale issues (yet). However, a prep center may help with emergencies such as unexpectedly needing to leave town, or receiving larger shipments than you expect.
New sellers with low volumes can take advantage of prep centers when:
- The seller will be traveling or lives outside the United States.
- Suppliers refuse to ship to a residential address, or require a loading dock to delivery goods.
- The prep center is located closer to suppliers, which saves on shipping.
Prep centers become more useful when you need to scale
Generally, prep centers become more useful once you’ve identified strong selling products and need to scale your operation. Here are some situations where you should start considering a prep center:
- Packing Amazon shipments takes so much time you’ve thought about hiring a helper.
- You’re thinking of opening your own warehouse.
- You’re spending a lot of time researching FBA prep and packing requirements. Prep centers are experts at this, can save you a lot of time and money, especially since they usually purchase supplies in bulk.
Are there any hidden or surprise costs when working with a prep center? How do I get a firm price?
The FBA prep industry is relatively young, and standard ways to communicate prices have yet to develop. Often, the prices shown on websites or brochures can be misleading. So, how do you know the right price to pay for FBA prep services?
Ask what’s included in the price.
Some prep centers may advertise $0.45 for “bundling”, which can sound like a great price. However, that may not include charges for loading/unloading trucks or the cost of various packing supplies. On the other hand, a higher price like $1.25 may be all inclusive.
Check about surcharges.
Many prep centers will apply a surcharge for unexpected deviations, like your shipment arriving early, or your products being packaged differently than expected. You can avoid, or at least plan for, these charges if you ask about them in advance.
Understand split pricing
Many prep centers use “split pricing”, where the actual prep work is charged one way, and the shipping and receiving part of the service is billed a different way. The combined prices are the total cost of the service. The price can fluctuate if your shipment volume or methods change.
Should I have a relationship with a prep center, even if I don’t need one right now?
Yes. A prep center can help in the same way as insurance, a lawyer, or a first aid kit… it’s better to have one and not need it, than need it and not have one.
Emergencies happen and opportunities arise. You don’t want to turn down a great sourcing opportunity just because your current supply chain can’t support it. Likewise, if you have to leave town or something a prep center can keep your operation running until you return.
Emergencies Happen: Prep Centers Can Help
Relationships with prep centers can be an amazing strategic advantage, so planning ahead is well worth it. When Amazon began refusing certain shipments in April 2020 due to COVID-19, LDR was able to fulfill thousands of customer orders directly. That is the kind of advantage partnering with a prep center can have when planned ahead of time.
It’s important to establish this kind of relationship before you actually need it. That allows time to iron out all the details and saves money in the future. Otherwise, you may find yourself scrambling to find a prep center… and wind up with a bad match or missed opportunities.
What if something goes wrong? What kinds of things go wrong with FBA prep?
Most prep centers offer a warranty for their work, so they’ll work with you to solve any problems that arise. This may include covering associated costs, or simply refunding you. It’s important to ask what kind of warranty your prep center offers and what it applies to.
The two most common problems stem from miscommunications or improper quality control.
Do whatever you can to reduce miscommunications about what you need. When a prep center asks you a question, do your best to answer them clearly. All too often, people new to working with a prep center are surprised by some of the questions asked. It helps to keep in mind that while you’re the expert at sourcing and selling your product, the prep center is the expert at prep and packing. If your prep center recommends something you weren’t doing yourself, there is likely a good reason for it. Ask questions and clarify before moving forward.
Improper quality control
Well executed prep centers will have quality control mechanisms in place similar to a factory environment. Ask what’s in place. They should have checklists, random inspections, spot checks, and other systems in place to prevent mistakes. A quality prep center won’t be shy about sharing their process with you.
An important note about insurance
“Warehouse insurance” is a very common miscommunication, or misunderstanding in the prep and logistics industries. Many warehouses advertise insurance, but many sellers don’t understand what it actually covers. Make no assumptions.
Obtaining insurance which cover’s someone else’s property in a warehouse is prohibitively expensive, and most insurance agencies don’t offer it. Many warehouse insurance policies do not cover loss or damage of your property while it’s stored there. Instead, they cover damaged caused by your property, like if it falls on somebody or damages equipment.
If you’re concerned about your inventory, take out your own insurance on it. Some warehouses may offer you a discounted “rider” on their policy as well, which accomplishes the same thing.
My supplier does my prep, so why have a prep center do it?
Does your supplier sell on Amazon themselves? If not, what are the odds they’re prepping and packing your products the best way?
It takes professionals with skin in the game to do it correctly. Your supplier is the expert at making the product, and you’re the expert at selling it. Without a supply chain and prep expert somewhere in the equation, your team is missing a key player.
Is it a bad idea to have amazon do my prep? What can a prep center do better?
Amazon doesn’t actually offer “prep”. They may perform labeling or basic things like taping caps onto bottles or bagging items, but they don’t handle bundles or kits. Amazon often performs the minimum level of prep needed, which can lead to a higher rate of damaged merchandise and returns.
At the basic level: if Amazon messes up (and they do), it’s your responsibility to fix it, not theirs. Service is really key. When something goes wrong, you want a prep center who can quickly resolve the issue. Amazon seller support isn’t well known for that.
What about removal orders? What can a prep center do?
Prep centers may be able to accept removal orders to pivot, sort, or liquidate inventory. Not every prep center offers this service or provides the same level of detail.
Many prep centers stay away from this, because finely tuned processes and technology are needed to scale. LDR offers a pretty innovate removal order service that’s as detailed as you need it to be. Why not check it out?
Prep centers who offer removal order services may be able to help:
- File claims with Amazon about fraud, missing or incorrect items.
- Sort, relabel, or repackage items.
- Repair or recondition items for higher resale value.
- Forward removal orders back to your supplier.
- Sell the goods in a different market, or through a liquidator.
How much does volume affect pricing? How can I negotiate lower prices?
Most prep and pack centers offer some sort of volume discounts, especially when a customer’s shipment volume reduces their costs. Sending a lot of product usually qualifies, but the best rates can be found when your shipments are very consistent and predictable. Here are some situations that save prep centers a lot of money, so they can pass on the savings:
- Highly consistent shipments they can plan for. If you can schedule your shipments on a regular, predictable basis the prep center can save on various overhead costs. Be as specific as possible. If your shipments can be scheduled for every other Wednesday, say that.
- Long-term business. Many prep projects are one-off, occasional projects. A prep center may be willing to offer lower rates if they know your project will be on a recurring basis.
- Fast turnaround. Many prep centers rely on fast turnaround so they don’t need to pay for expensive storage space. You may be surprised how many sellers allow inventory to sit without prior communication. Agree to move your inventory quickly, and you may get better rates.
Will a prep center make my supply chain completely hands off?
Many Amazon sellers dream of a totally hands-off online business. It’s possible to achieve with the right combination of partners and standardized processes, but it’s not easy. Be careful if anyone tells you its easy to make a living from a totally hands-off FBA business.
A prep center can significantly reduce the amount of time you have to spend figuring out shipping requirements, packing boxes, or physically touching your inventory. However, you should still be very plugged into what’s happening inside Seller Central.
How do I know a prep center is trustworthy? They seem to be popping up all over the country.
With so many prep and pack enters opening across North America, it’s hard to know who you can trust. Here are some indications a prep center is for real, and not a fly-by-night operation.
- Pictures on their website show the actual prep facility and employees.
- They will let you schedule a tour. Be aware, some prep centers will require you to sign an NDA before allowing a tour. That’s perfectly normal.
- They don’t sell on Amazon. If they do sell, they’re very clear about it and offer a non-compete contract.
- They offer a non-disclosure agreement or other contract to protect your intellectual property and business strategy.
Overall, a trustworthy prep center should be very transparent about their operations, and be easy to contact. Watch out for prep centers that only allow digital forms of contact, like a form on their website, and won’t show you any pictures of their facility.
What does it cost to ship into FBA from a prep center?
A prep center can’t reliably estimate Amazon partnered carrier rates into FBA. You should just ask for the center’s address and estimate it yourself in Seller Central.
In general, you can get lower rates by using a prep center centrally located near many Amazon warehouses. Most of your shipments will be routed to nearby warehouses, but Amazon will occasionally route some farther away. Prep centers have no control over that.
What is the advantage to using a prep center in southwest Ohio?
Southwest Ohio is a great location for a prep center, especially for sellers dealing in wholesale goods or goods that can be imported using international air freight or the Atlantic ocean.
Major shipping hubs are less than a day from Southwest Ohio, including the DHL international air hub, UPS, Fedex, and Amazon’s air hub. That means packages sent to or from Southwest Ohio can reach most of the United States in 2-3 days.
Ohio also has great transcontinental highway and rail access, making it ideal as a distribution hub when you need to split large shipments.
Does your prep center offer fulfillment? Can they send some items to FBA, and send others directly to consumers?
Prep centers with this capability can be a lifesaver and an important strategic partner. There are many situations where you might consider a split supply chain strategy instead of sending everything into FBA.
- You can place larger orders with suppliers. The prep center can replenish your FBA stock as-needed, as well as ship orders you sell on other markets like Shopify or eBay.
- Products with highly custom or strange packing requirements may be better suited for fulfillment from your prep center instead of FBA.
- Remove “unfulfillable” stock from FBA and have your prep center fulfill orders directly to consumers. Often, “unfulfillable” stock is still in very good condition, or may even be “new” aside from shipping damage to the outer packaging.
- Store spare parts to fulfill to consumers, such as replacement cords or batteries.
Why do some prep centers have minimum quantities? Is there a reason some refuse online arbitrage?
Prep can be a very low margin business model, and the overhead required to switch between many small orders can kill profits. This is especially true when the products need different prep or packaging. In general, it’s very hard to scale unless the prep company is mostly focused on small orders from a large number of sellers.
Don’t be discouraged just because a prep center has a minimum order quantity. They may waive the policy if you agree to regular, consistent small shipments or your products are very similar to something else they already prep. Either factor may reduce the overhead enough to make it worthwhile.
Online arbitrage, even with larger quantities, can add extra overhead some prep centers shy away from. Often, its because of how the products are delivered. Instead of predictable case-packed shipments or pallets from a supplier, OA shipments may arrive spread across several days with only one item in each package. That increases the overhead to unload deliveries, identify them, and dispose of the associated trash. If a prep center refuses your online arbitrage request, see if you can eliminate any of these problems. They may change their mind.
What are your prices? Can I get a quick estimate?
Most prep centers advertise an averaged or generalized estimate on their website, but can offer you a better price with more details. When researching prep centers it’s important to approach it like adding a business partner or hiring an employee, not buying printer paper. You should focus on the process and service first, before making a decision based on price.
Can a prep center pivot my inventory, or have it removed and altered before sending back to FBA?
In short, yes, many prep centers can do this. You might be considering this because you need to reconfigure a bundle, replace labels, or change something else about your inventory before sending it back to FBA. This is also a good idea if your products are experiencing lower ratings or higher returns than inspected. A prep center may be able to uncover the reason and help you correct it.
When exploring this option you should keep a few things in mind:
- Amazon may have restocked some of your returned items. These items may need more work done to them than expected, like replacing boxes or covering labels. This can’t be accurately predicted before the items are removed.
- Be wary of missing items or wrong items sent back by Amazon. You may ask your prep center to photograph them so you can file claims with Amazon. It happens fairly often.
- The removals are rarely received the same way you sent them to FBA. They will often arrive spread across multiple shipments, and may be packed differently than when first sent in. It can sometimes take weeks before the prep center will receive all of the products.
- The overall process usually takes longer than prep. Mostly, this is because of the unpredictable shipments and packaging.
You may be able to speed up the process by providing the prep center with a list of all expected tracking numbers and contents. Our article about finding removal order tracking numbers explains how to do that.